With ICE and CME margin hikes - that last bastion of supply/demand imbalance suppression - no longer having an impact on crude price, it was only a matter of time before the last theatrical measure in the price arsenal was used. Per Dow Jones: "White House Chief of Staff Bill Daley said on Sunday the Obama administration is considering tapping into the U.S. strategic oil reserve as one way to help ease soaring oil prices." Speaking on NBC television's "Meet the Press," Daley said: "We are looking at the options. The issue of the reserves is one we are considering. ... All matters have to be on the table." There has been support among Senate Democrats for tapping the reserves. Senator Jay Rockefeller on Thursday became the third Democrat to ask President Barack Obama to tap America's emergency oil supply to cool prices that have risen past $100 a barrel on the strife in Libya." What our esteemed politicians fail to realize that tapping the SPR is analogous to Lehman filing an 8K declaring to the world it is now tapping directly into the Fed's discount window for its liquidity - that didn't end too well. The problem with the SPR is that as a non-marginal replacement of supply it is largely a puppet: with a capacity 726.7 million barrels, the SPR holds a 34 day reserve at the US daily consumption of 21 million barrels. The picture is slightly better when considering that the US only imports 12 MMbd, meaning there is a 58 day supply. But the biggest issue that nobody is considering, is that the maximum total withdrawal capacity is physically limited to just 4.4 million barrels per day. In other words, should the MENA escalation flare up, there is no way to physically replace all the lost output. Yet what is most troubling is that even as the US is about to start using up its reserves, Asia is actively shoring up its oil, meaning that as our own oil buffer gets ever smaller, Asia could easily dictate economic terms over the OPEC cartel as soon as a few months from now if the Bernanke liberation wave does not end any time soon.

More on the last ditch attempt at preventing all out desperation at the oil pump as gas now moves solidly into $4 territory across the country.

In a letter to Obama, Rockefeller said a "limited draw-down" from the nation's 727-million-barrel Strategic Petroleum Reserve "can protect our national security by preventing or reducing the adverse impact of an oil shortage."

On Wednesday, U.S. Energy Secretary Steven Chu ruled out releasing oil from the reserve, saying ramped up oil production in Saudi Arabia should lower the crude price.

"That's going to mitigate the price increase," he told reporters on Wednesday. "We're hoping market forces will take care of this."

Just as market forces took care of Lehman once it became known that the bank was a zombie, solely reliant on the Fed for liquidity. This time the liquidity is of a different sort, but the reaction will be the same: how long before our idiot politicians finally understand how the market operates?

In the meantime, CHina's response is by far the more logical one (from Dow Jones):

China will start work on building strategic oil reserve tanks at the north-eastern port of Tianjin by May, China Daily newspaper reported Saturday.

Work will be completed before the end of China's 2011-2015 five-year economic plan, and filling this reserve will start when the oil price is "appropriate", Tianjin city official He Shushan was quoted as saying.

China's efforts to build up oil stocks are closely watched by energy market analysts, as its demand for oil is a key driver of global prices and huge amounts of crude are needed for the project. China imports more than half the oil it uses.

The reserve site in Tianjin is among eight stockpiling bases being prepared in the second phase of China's strategic petroleum reserve project.

These eight sites will have 26.8 million cubic meters of capacity, able to store the equivalent of 169 million barrels of crude oil.

The western countries' energy watchdog, the International Energy Agency, has repeatedly criticized Beijing for not publishing national oil stock volume figures, which are needed to calculate global oil demand.

Sites for other second-phase bases include Zhanjiang and Huizhou in Guangdong province, Lanzhou in Gansu province, and Jintan and Jinzhou in Liaoning province.

China's petroleum reserve capacity was enough for 39 days of consumption by the end of 2010, with this comprising the SPR oil and a further 168 million barrels of commercial reserve capacity, state energy giant China National Petroleum Corp. said in January.

It is not only China: all of Asia is taking the prudent step of preparing for a very long storm. From the FT:

As oil prices spiral higher amid turmoil in Libya, developing countries across Asia are taking evasive action, shoring up their strategic petroleum reserves against the risk of a prolonged supply shock. Their actions could propel crude even higher.

The Philippines, citing events in the Middle East, announced on Wednesday that it would require oil companies in the country to maintain 15 days of reserves, and refineries to keep enough oil to last for 30 days.

Manila’s move is the most visible sign yet of how Asian countries are seeking to improve their oil security amid what is shaping up to be the worst supply crisis since the invasion of Iraq in 2003. Other big regional oil importers are likely to follow suit.

China is the world’s second-largest oil importer after the US. India is the world’s fifth-largest, ahead of countries such as South Korea, France and the UK. But the pair lack a strategic petroleum reserve that can be tapped during a supply crisis similar in size and scope to the ones held by western countries.

Unlike industrialised countries, which built up their stockpiles three decades ago in the wake of the 1973 oil crisis, China only recently began its strategic reserve programme, starting to fill reserves in 2006 and completing a 102m barrel build-out in “Phase One” two years later.

The second phase of the programme will build a further 168m barrels of reserves by the beginning of next year.

When China finishes filling its reserve, which it is expected to do by 2020, it will hold about 500m barrels, equal to roughly three months of imports and the second-largest stockpile in the world.

China’s strategic stockpiling “is likely to be a feature of the global oil market not only this year but this decade”, says Soozhana Choi, head of Asia commodities research at Deutsche Bank in Singapore.

Although purchases are kept secret, analysts and oil traders believe that events in Libya and the prospect of further supply disruptions in the Middle East could boost strategic buying of crude.

“With the expectation that prices are going to rise, they will accelerate the pace of tank-filling,” says K.F. Yan, director at energy consultants CERA in Beijing.

Here is a brief lesson in FIFO/LIFO: as the US is about to use up a whole lot of low cost-basis oil, the expectation of surging Asian demand for crude will send prices skyrockting even more, forcing the US to use up increasingly more cost prohibitive oil. Of course, all of the oil in the SPR will have to be replaced, as the US then suddenly become a marginal buyer of oil at the next price of $100+/barrel, which will also be factored into expectations, which in turn will send the oil price even higher, and by the time this horrendous attempt at damage control is over, gas at the pump will be well over $5/gallon.

I can't believe how stupid there people are. This is absolutely no the time to use SPR:

1) Libya's lost oil output is less than 1% of global production. What are you going to do when Saudi is knocked out ?

2) US economy is less sensitive to oil price than China, why should US sacrifize SPR to lower oil price for China?

3) Last but not least, $100 will be the floor price for oil in a few years. In other words, it is very cheap! If we release SPR now, we will need to refill the tanks at higher price in the future. Sell low buy high? Just brilliant.

It may be of relevance if you ( a rockawho?) are aware that there will soon be a significant reduction in oil flowing from Libya. Something has to be done to allow troops in legally (more than just 50K mercenaries).

There are obligations to the corporations that hold the rights to the oil, to the corporations that supply the military and to your partners security interests in maintaining a controlled unrest in the area so they may pursue their ambitions.

Game theory would strongly favour leaving the SPR untouched until/if Saudi has production problems. Imagine the political disaster if they ran down the SPR for Libya to find nothing left if Saudi exports halted later.

Not big on the Jew bashing thing as well. You can't blame a group of people for being smart at business decisions.

I wish my great grandpa started an import • export business in the 20's or started a business that was still booming today. For the most part I see a hard working people who enter business with an eye toward the future. They also teach their kids about life at a young age not leaving this important task to the t.v. or public school system.

and not to be picky but Yeshua bin-Josef was indeed a Jewish rabbi who studied under the tutelage of John the Baptist and in the school of the Essenes.

He rejected the Talmud, the oral Torah (Mishnah...), which basically said that Jews could lie at will to people who weren't Jews, in much the same way that Muslims can treat "infidels" any way they want because they weren't really people.

Jesus rejected this idea out-of-hand, so I suppose one may say that he wasn't a "real" Jew. When he wanted to take his ideas mainstream, with the secret sponsorship of Joseph of Arimathea, a member of the Sanhedrin, he and his pals went to the Temple with weapons, expecting to prompt a popular uprising that did not materialise. He got busted and convicted.

A special place was erected for this rebel of the (Jewish...) State and he was nailed (only done for very special convicts...) to a cross and erected directly outside the gates of Jerusalem, so that all who entered or left the City could see that any dissent from the Oral Law would not be tolerated.

Some also say that Joseph paid Pilate to release Jesus but Pilate couldn't just let that slide, so a surrogate was put in his place- the "betrayer" Judas Iscariot. Jesus may have been married to Joseph's daughter, Mary.

Now, this is not to take away anything from their achievements. In fact, quite the contrary. Yehsua was a rabbi, so he was well aware of the expectations of the Messiah to the people and Joseph had enough money to make it happen. Water into wine, the endless fishes, entering the South gate on the back of an ass...

It was manipulation of public perceptions and beliefs, pure and simple. But think of the huevos it took for these men to try to pull this off! Against the most powerful empire the world had ever known; against the power of the rulers of the Temple of Jerusalem. Twenty guys or so go in with swords ablazin'! Wow. I'd have loved to have been there that day, I tell you.

That having been said, it is clear that the teachings of Christianity are by farthe best thing that have ever happened to this planet and I, being a devout atheist, thank God for that.

Good will always triumph.

Always.

_______

If my opinion offends, I apologise but the facts add up and can be found in the writings of many modern scholars, most notably Joel Carmichael, particularly the book The Death of Jesus. Fascinating and very, very enlightening.

What dumbass Rockefeller hasn't figured out is that Obama will use the strategic reserve to fuel Homeland Securities' plan to crush the citizen's revolution that is coming to the United States of America.

Calling any future uprising the result of "patriotism" misppropriates the word IMHO. If the population was going to stand up for values articulated in the Constitution, it should have happened after the implimentation of the "Patriot Act," and the sanctioning of warrantless wiretapping, and other Constitutional abuses.

The coming "uprisings" will just be folks who freaking out because they have lost the benefits of our unsustainable lifestyle and now have to confront the reality that most of the world already lives in: Abject poverty.

Non-Lethal munitions applications will be used by military personnel to apply the minimum force necessary while performing missions of crowd control and area security at key facilities around the globe. These devices will aid military forces/commanders in situations of hostages rescue, capture of criminals, terrorists, or control of other adversarial persons.

Malodorants and irritants are two types of nonlethal weapons designed to temporarily mark, incapacitate, or drive away persons from an area. Environmental assessments have been performed on the malodorants Bathroom Malodor and Who-Me?, and the irritants Oleoresin Capsicum (OC), CS-Mace, and CN-Mace.

A running gear entanglement system (RGES) is proposed to protect Navy ships in port, and other waterside assets such as museums and marinas. The entanglement device will foul the propeller of unauthorized vessels attempting to approach restricted areas.

A pulsed-energy projectile (PEP) is under development that uses a chemical laser technology to produce a large flash, bang, and shock wave to temporarily disorient and incapacitate individuals in a crowd.

Minor injuries can and will occur (bruises, stings, etc.) to individuals who are struck by payloads of Non-Lethal munitions. In fact, even if properly employed severe injury or death are still a possibility. Non-Lethal weapons shall not be required to have a zero probability of producing fatalities or permanent injuries. However while complete avoidance of these effects is not guaranteed or expected, when properly employed, Non-Lethal weapons should significantly reduce them as compared with physically destroying the same target.

For the guns and ammo folk on this thread, I'll say you do not stand a chance.

You have to get smarter, not stronger. Legends like David and Goliath have survived the test of time for a reason.

The only way we're going to win- if it comes down to it (but I don't think it will...)- is to have a whole load of geniuses on our side who can construct a re-focusing microwave cannon out of paper towel rolls, an old tube of toothpaste and a metal rubbish bin.

In short, we need McGyver.

We have to work with our brains and not set ourselves up to be cannon fodder.

Fighting a giant with a million slings and arrows might work or it might not. Arguably the most in demand commodity on the face of the planet is productive labor. The fractional reserve parasites need it to survive. You want to take them out? Organize a general strike.

Yeah, I say BS to that too. It's a matter of numbers. 300 million civilians versus maybe 10 million police, national guard, etc. The way revolutions work is that initial government response incites more people to join the revolution. There is a tipping point where the numbers just overwhelm the government forces. Also, there is a point where the government forces start to defect to the other side.

ORI, that puts me in mind of the charge of the Light Bragade or the Polish cavalry charging a Panzer division - gallent but doomed and ultimately stupid. We need to investigate the virtures of a disorganized resistance. Gorilla warfare is much more productive.

And a lost cause under current circumstances. A fine tell tale as to not only how clueless policy makers are, but of how scared they are that the blocks of WIC cheese being dropped by helicopter are losing their effectiveness.

Hey Mohamed El-Erian -- You were discussing the astuteness of established governance and its ability to maintain stability by acting proactively & preemptively?! ROFLMAO

A third group of countries, including in the GCC, will likely avoid regime change. Governments have the willingness and ability to respond proactively and preemptively. They start with greater political and social legitimacy, as well as better means to help citizens deal with economic and social pressures. Indeed, some have already shown considerable skillfulness in understanding the dynamics in play and have reacted accordingly.

When the SHTF, I'll say a prayer for you and your running shoes. Zombies can run fast when they're hungry and doors will only last "so long". Don't expect to come to the burbs empty handed or you'll end up just as bad off as if you were running from the zombies. Same goes for weaseling your way into the country-like areas. Farmers won't ask questions first if you get my point.

Sure don't forget to buy a toe tag and fill it out for yourself, it will make it easier for the coroner when they scrape you off the pavement after some idiot talking or texting while trying to reach for his/her dropped cigarette while speeding hits you.

"The US Energy Policy Act of 2005 requires the SPR storage capacity to be raised to 1bn barrels. In the Jan 2007 State of the Union address, President Bush announced the intention to double of the SPR capacity to 1.5bn barrels by 2027", Morgan Downey, "Oil 101", pg 274.

Too bad it never moved beyond the intention.

Furthermore,

Approximately two thirds of the SPR crude is sour. (pg 276)

One would hope this wouldn't cause refinery problems.

Crude oil in the SPR is contained in a number of salt caverns near the coast of Texas and Louisiana. (pg 274)

If they TAP the SPR then they are admitting that we do have inflation that the FED RES is not correcting, but is making and it is an admission that the inflation could be runaway. This is BAD NEWS that these idiots are even considering it. The SPR is for times of "Natinal Emergency" and rising prices or some political party's political life is not in that definition. These politicians these days and their counterparts in the Civil Service are nothing of character I tell ya.

We are going to be "living in interesting times". Wait and see, this is the first of many shoes to drop.

Trying to talk the oil price down by saying they'll tap SPR is always the first step. It's all about the expectations and uncertainties.

What we should be doing is lifting the moratorium in the Gulf but the Obama regime, leading us into the 15th century, is in contempt of a Federal order to lift the ban at the very time we are in a precarious situtation.

After that, drill baby, drill. We have gas, coal --- we got it all so let's f'ing do it. And get those nukes going while we're at it. There's no AGW and my daughter and granddaughters aren't going to be wearing burkas.

in another decade oil just to fill global storage demand will amount to a 1MB a day. the bad part of this is the cost, above ground storage costs add several dollars to the cost of a BBL.

Recall under Bush the energy Sec was delegated the right to release oil from the SPR. Formmerly only POTUS could do it.

Bush used the SPR masterfully to bring gasoline prices down ahead of the 2006 midterm elections. In a post Katrina environment, much of enterprise owed the SPR oil, the SPR includes both Salt Dome and Enterprise Storage, for a total of 1.5B bbl.

Oil that was in enterprise was shifted in account back to Salt Dome, government storage, but not physically transferred, then the oil was double counted for inventory purposes. the tankers arriving at NYC were told inventories were high, and prices were adjusted lower.

The traders knew it was bullshit because they started ignoring the inventory reports, but to prove they were right all you had to do was wait for crack spreads to widen. They did.

O(bush)ama needs to start working this angle if he wants gasoline prices to come down by election day, and if you have one brain cell left you know they must. In 2006 Goldman (Paulson, remember him) rejiggered their commodity index, and dropped gasoline from the weighting, that sent prices plummetting.

O(bush)ama may not have that luxury, but he can force Enterprise storage (hedge funds and specs) to cough up the oil. From a political stand point it works this way.

You take office and gasoline is $3.50, lets say, then after two years it goes to $5.00, the public hates you, but in the two years left before the election you manage to get the price back down to $3.50. You are a great and wise leader. First you take something away from them, then you give it back, and you look like a hero.

meanwhile the poverty in the ME means selling more oil not less, but its really Chinas problem they need the oil to make stuff to sell us. we buy the stuff, and what it costs them to make it is of no consequence as long as they take our dollars, and peg themselves to it. The US has all the aces here, if o(BUSH)ama can play his cards correctly, and of course we elect these people because they are lying devious bastards, when dealing with those smelly foreigners.

since the US outsources manufacturing, the security of global oil reserves is really not a US priority.but key to solving all this will be cutting foreign aid to the former despotic ME states we have guarded. one can see some bipartisan agreement on that, although Obama is a statist politician. he will ultimately cave to the pressure.

(the President for life moment in the Bush administration was the stealth attempt to get the nuke weapons away from Pakistan. For Obama it is $25 oil)

the corporate supply chain is exceedingly flexible, if China wants to raise prices, maybe Mexico won't? there's always another poor country over that next hill, and with Wall Street and mulitnational system in full charge of the economy, they will run it that way.

You are so right. A constant high price will encourage proper behavior - it's this divergent occilation in prices that kills the type of investment and planning we need to mitigate the necessary contraction gracefully.

During the last price run, Matt Simmons kept recommending putting a floor under any price for just that reason.

ML8 wrote: If S.A. goes into a full blown revolution and suffers significant supply curtailment, THEN the SPR talk should begin.

I disagree. Attempting to use the SPR to manage price or to manage domestic shortages is a misuse of the resource. SPR should be for military use only, IMO. When you see more than a million Mexicans amass on the Rio Grande, TAP. Before that, you're wasting it attempting to control a price you can't control or attempting to ameliorate shortages that will only continue.

Please the current group of geniuses couldn't see a shit coming, even though it happens everyday.

The beauty of branding something as "one in 100 years" or "unforeseen", no cohesive policy response is required.

Of course we have had "once in a 100 year financial crisis" 3x in past 12 years. And had $4 a gallon gas, (and the consequences thereof) a mere 4 years ago.

Chairsatan, and his side kick Tiny Tim have worked overtime in the propaganda departement (as we come up on the 2 year anniversary of "green shoots") over the last 2 years to ensure that NOBODY suffers PTSD from 2008. FUCKERS.

For the first time, the Chicago Police said Friday they know who hit David Koschman and knocked him to the ground in a drunken confrontation in the Rush Street area, leading to his death from a brain injury 11 days later — but they’re not telling.

They said they are closing Koschman’s 2004 homicide case without asking the Cook County state’s attorney’s office to charge anyone because they concluded the punch was thrown in self-defense.

Police reports made public Friday black out the name of the man who detectives concluded threw the lone punch at Koschman. But the descriptions they provided and accounts given by witnesses and others to the Chicago Sun-Times make clear it was Richard J. “R.J.” Vanecko, a nephew of Mayor Daley and White House Chief of Staff Bill Daley.

Vanecko, 36, has refused to speak to the police on the advice of his criminal-defense lawyers, including Terence Gillespie, according to the police.

When I buy something, I first do a ton of research on the business or product and lay out a timeline.

Like Tata in India, it's was already down 33% because of the inflation rate and some bad news on the Nano. The company is a powerhouse in India and they purchased Jaguar & Range Rover during crisis. I'll keep this for a long, long time.

I do not trade yet ( not enough cash ). So almost everything for me is buy and hold.

It's a crazy subject from my perspective. Like the low refinery count in the USA, this helps push up pricing in gas IMO, in Arizona they can't use the same gas as Cali because its different in some ways, tons of red tape.. And the fact its traded any bad news draws in the big money going long and the fact information • news goes global in seconds, crazy shit.

Did you build your pile of cash from nothing ? Or was your family into trading how did you get the ball rolling ? As the middle east shit started you could have went in heavy on oil and made a killing the last few weeks ....

How long have you been investing.. ? How much did you start with or did it happen slowly over 10-15 years.

Has it always been in energy and commodities ?

Also, I really wish your help • tips could be purchased from my td ameritrade account. I'm not a big dog with a global trading account :-) I have studied finance ect for 10 years but just started buying stocks over the last 1-2 years. I would read about this credit issue or that bubble over that ten year span but I never took the step and purchased gold like the authors prescribed.

Started in ~1990... got to have some seed corn to start. I remember levering a LOC to buy foriegn currency bonds as the $CAD was crapping out...

Walked away from grad school with $60K, no debt. Took a 6 year hiatus when I lived overseas as there was no good way to invest in Switzerland for the amount of capital I had...

Only been *active* since 05, when I really clued in about oil. Before that it was "classic investing" based on macro-economics, e.g. was in Bonds for the dot-com fiasco. I stuck with Mutual funds until I realized that they did not meet my needs.

i listened to the interview and it seemed pretty obvious to me that he side-stepped the issue of tapping the strategic reserves. he said it's only been done a few times and with the unrest in the middle east tapping into the reserves would have to be weighed against other factors but that all options were on the table.

he also said the decision to use of the reserves has more to do with other things besides price.

you have to really read between the lines with what he said, but to me he meant if anything they'll try to increase the reserves. which, according to this article, seems to be what other countries plan to do too.

Everyone on this board sounding like pre-08 collapse. Then, as now, people calling for $200-300 oil. Tells me a collapse around the corner, engineered or not. We have record Cushing inventories of oil and record gasoline inventories. While that would mean nothing if Middle east falls to radicals, it does tell us the economy is weak and likely getting weaker. Obama likely just setting up energy prices so he can drop them in 2012 and appease the sheep. Winning?

Your understanding of WTI needs to be filled more. Sure the economy is weak and getting weaker. But oil IS the economy. It's not optional. So in a failing economy with a depleting resource, you get the double whammy of shrinking GDP and rising oil price. If you don't think price will continue to rise, consider Asia.

Well, the economy fell apart on the run-up to $150/bbl oil - but money was worth more way back then. What can we endure today? Because of how tenuous things are - I think we'll begin to see big problems in a few months at this level as gas/diesel prices trickle into food prices. Next leg down is going to be a PR disaster - TPTB are going to need a scapegoat...

Obviously, it's more complicated than that - the entire system [debt-based money, etc.] is predicated on cheap, sustainable growth, which is no longer sustainable, or cheap. The POO is a very public harbinger of the end of our boom cycle, and I have yet to see a culture that managed a contraction gracefully.

"Stategic" Reserve. So we're applying the Saudi strategy? Which is to tap resources to mollify the awakening sheeple to kick the can a little further. Is that right? Silly me thought that it might be for military appliactions, and so on.

smells 2008,when Obama crashed 147$ oil price by using strategic reserve,prepare ,the commercials are short oil,the speculators are all hystory 2008 even high,it will be again dirty play regulated market.Remember,China was not bully on oil when it was 35$,every one then sucked,so,will be this time again

smells 2008,when Obama crashed 147$ oil price by using strategic reserve,prepare ,the commercials are short oil,the speculators are all hystory 2008 even high,it will be again dirty play regulated market.Remember,China was not bully on oil when it was 35$,every one then sucked,so,will be this time again

Umm... Obama wasn't President in 2008, it was Dubya. Get your facts straight.

Tapping the SPR was already in the market. It was discussed among Democrats speaking to the White House 7 days ago. At best, and SPR release will do nothing but pull down WTIC as it will create more supply at Cushing. It will do nothing for Brent, and the world sill simply ship less oil to the US. Sure, it might take a few traders out for 24 hours as WTIC pulls back to 100. So what.